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The Economy, stupid


NorthSideSox72

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QUOTE (NorthSideSox72 @ Nov 13, 2008 -> 12:06 PM)
Except that is a fully incorrect understanding of what a CDS is.

 

Yeah, I guess I wasn't reading too closely. Their description was inaccurate, but the CDS market did get heavily leveraged. I think it was an NPR story where I heard there were about $9T worth of actual mortgages for about $45T worth of CDS hedges/ bets.

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QUOTE (StrangeSox @ Nov 13, 2008 -> 03:21 PM)
Yeah, I guess I wasn't reading too closely. Their description was inaccurate, but the CDS market did get heavily leveraged. I think it was an NPR story where I heard there were about $9T worth of actual mortgages for about $45T worth of CDS hedges/ bets.

Yes, the CDS market was and still is a huge problem.

 

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So what do you get when a credit crunch + bad economy meets a poorly run business?

 

Said marginal business tanks spectacularly.

 

And when its a large (70-100 million dollar revenue company) services company?

 

Four million dollars of payments to travel providers disappear, tens of thousands of passengers in the lurch and Rex Kickass on the street with no place to sell cruises.

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QUOTE (Cknolls @ Nov 13, 2008 -> 11:59 AM)
I think we could trade above 900 on futes today, 905 to be exact. If not today, definitely tomorrow.

It certainly seems to me like we're locked in to 1 of those 1000 point cycles right now, where we're bouncing between 8000 and 9000 and no one wants to cross either number until something much worse or much better comes in. So in other words, today's the day to sell!

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QUOTE (Rex Kicka** @ Nov 13, 2008 -> 04:24 PM)
So what do you get when a credit crunch + bad economy meets a poorly run business?

 

Said marginal business tanks spectacularly.

 

And when its a large (70-100 million dollar revenue company) services company?

 

Four million dollars of payments to travel providers disappear, tens of thousands of passengers in the lurch and Rex Kickass on the street with no place to sell cruises.

4 million never made it to the travel providers? Yikes. And Rex... sorry again about your job.

 

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QUOTE (Balta1701 @ Nov 13, 2008 -> 05:07 PM)
It certainly seems to me like we're locked in to 1 of those 1000 point cycles right now, where we're bouncing between 8000 and 9000 and no one wants to cross either number until something much worse or much better comes in. So in other words, today's the day to sell!

 

Its been more like 7900 and 9500.

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Consumer retail sales dropped by 2.8% in October - the largest drop ever recorded.

 

Yowza.

 

Good news is, oil is down around $60/bbl on the economic weakness and dollar strength. Well, good news in terms of short term spending, anyway. Bad news for alternative energy. And those prices won't hold that low either, in the long run.

 

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QUOTE (NorthSideSox72 @ Nov 14, 2008 -> 11:44 AM)
Consumer retail sales dropped by 2.8% in October - the largest drop ever recorded.

 

Yowza.

 

Good news is, oil is down around $60/bbl on the economic weakness and dollar strength. Well, good news in terms of short term spending, anyway. Bad news for alternative energy. And those prices won't hold that low either, in the long run.

 

Short-term I wouldn't be surprised to see them go under $50. Buy calls is all I have to say.

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QUOTE (southsider2k5 @ Nov 14, 2008 -> 11:57 AM)
Short-term I wouldn't be surprised to see them go under $50. Buy calls is all I have to say.

Yeah, short term I think it ranges around in the 50's and 60's, and that's what the commodities guys I talk to are saying. Maybe flirts with $50 even or so. But long term, its headed up. I'd be buying calls for 2009 and 2010 contracts.

 

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QUOTE (NorthSideSox72 @ Nov 14, 2008 -> 12:11 PM)
Yeah, short term I think it ranges around in the 50's and 60's, and that's what the commodities guys I talk to are saying. Maybe flirts with $50 even or so. But long term, its headed up. I'd be buying calls for 2009 and 2010 contracts.

 

It looks like the Dec09 par calls could be had for about 4.00. The 150's are 0.50 at 1.83 if you really wanted to stay small on your bet.

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QUOTE (southsider2k5 @ Nov 14, 2008 -> 12:32 PM)
It looks like the Dec09 par calls could be had for about 4.00. The 150's are 0.50 at 1.83 if you really wanted to stay small on your bet.

I don't trade commodities directly, but if I did, I think I'd take some of those Dec 09 calls around par (probably do an up range distribution of some kind from par).

 

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So, here's an interesting personal view I've had of the real estate market. Each month, I get a report sent to me, showing the sales of homes in my zip code. Take a look at the chart I got showing everything through October:

 

60647xn5.jpg

 

It shows units sold in the zip code each month. The greenish line is 2007, the yellow line is 2008. Look specifically at the most recent month (October) in 2008.

 

Yikes.

 

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I think we're gradually inching closer to the next (hopefully last) land mine in the credit mess...the implosion of all of these stupid credit card programs that the banks have been printing faster than the U.S. has printed T-Bills over the last 20 years.

Bank of America Chief Executive Kenneth Lewis said on Tuesday that the U.S. economy will get worse before it improves, and forecast record losses for the U.S. credit card industry.

 

"We, as an industry, may end up with possibly the highest credit card losses the industry has ever experienced," Lewis said.

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QUOTE (Balta1701 @ Nov 19, 2008 -> 11:09 AM)
I think we're gradually inching closer to the next (hopefully last) land mine in the credit mess...the implosion of all of these stupid credit card programs that the banks have been printing faster than the U.S. has printed T-Bills over the last 20 years.

 

 

Commercial real estate still has some room to fall.

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Markets tanking again, down around 5% on the big boards.

 

Seems like the DOW keepings flirting with 8000 but not getting below (at least not at close). The chart looks to me like its got a ground floor around that mark, unless some other major new lurking monster appears. With the news as bad as it is already, it would have to be a pretty huge monster.

 

I'm going to have to say to CKnolls, I don't think we're going to the 6's on the Dow. I just don't see it, unless something on the scale of a new swaps crisis or a thorough collapse of the auto industry occurs (more than just GM declaring bankruptcy - I mean someone ceasing major parts of their operations immediately).

 

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